Andy Dillon: Prop 1 will help repair finances

Oct. 20, 2012

Written by

Andy Dillon is treasurer of the state of Michigan.

Ballot language

A REFERENDUM ON PUBLIC ACT 4 OF 2011 — THE EMERGENCY MANAGER LAW Public Act 4 of 2011 would: Establish criteria to assess the financial condition of local government units, including school districts. Authorize Governor to appoint an emergency manager (EM) upon state finding of a financial emergency, and allow the EM to act in place of local government officials. Require EM to develop financial and operating plans, which may include modification or termination of contracts, reorganization of government, and determination of expenditures, services, and use of assets until the emergency is resolved. Alternatively, authorize state-appointed review team to enter into a local government approved consent decree. Should this law be approved?

YES NO

Financial woes

These cities and school districts were under authority of an emergency manager under Public Act 4 before it was placed on the Nov. 6 ballot for a referendum: • Detroit Public Schools • City of Pontiac • City of Ecorse • City of Benton Harbor • City of Flint • School District of the city of Highland Park • Muskegon Heights School District There were also three cities operating under consent agreements, a step below emergency management, at the time PA 4 was suspended. Those are: • City of River Rouge • City of Inkster • City of Detroit When PA 4 was placed on the ballot, its powers were suspended and the state then named emergency financial managers for those public entities under the terms of Public Act 72, the law that existed before PA 4. Source: Citizens Research Council

More

ADVERTISEMENT

We all envision a vibrant Michigan with thriving urban centers; where public services are delivered well and on-time; and, where students safely head off to school for a day filled with learning. Unfortunately, in some communities, that picture is fading due to chronic financial problems which have worsened in many cases due to the dramatic drop in property values and unsustainable labor agreements.

For two decades, Michigan has had a law that allows for state intervention in financially troubled municipalities and schools. Last year, that law was updated through Public Act 4, to help cities and schools avoid a financial emergency.

The passage of this law was praised by the three major credit rating agencies and Michigan was heralded for being on the cutting edge of fiscal

responsibility.

Better yet, the law is working. The state is currently preparing to exit Ecorse, where Emergency Manager Joyce Parker stabilized the city by instituting a new Public Safety Department, which increased on-call personnel while reducing expenses. Public Works services were brought in-house, saving $2 million annually. These and other critical steps eliminated a long-running deficit and a balanced budget is in place for the first time in eight years.

The state is also preparing to exit Benton Harbor and Pontiac. In Benton Harbor, the deficit that brought the city to the brink of insolvency has been eliminated. Emergency Manager Joe Harris enacted consecutive balanced budgets, following 12 years of losses, and negotiated five-year contracts with police and fire unions, saving $6 million. In Pontiac, the transfer of police services to Oakland County saved $2 million a year. Seventy officers now patrol the city, as opposed to 51 before the change.

None of this would have been possible without PA 4.

Opponents of PA 4 claim it is anti-democracy or anti-union and they’ve worked to have the issue placed on the Nov. 6 ballot. In reality, it is pro-citizen, because it helps ensure municipalities and schools provide the services for which residents pay taxes.

(Page 2 of 2)

Public Act 4 does not undermine democracy. It was passed by the Legislature, an elected body, after significant public discussion and debate. If appointed, an emergency manager is accountable to the governor and the Legislature, all of whom are elected. Additionally, local units are creatures of the state and the Michigan Constitution obligates the state to provide for the public, health, safety and welfare of its citizens. When severely stressed cities, towns, and school districts are unable to provide essential services, the state must step in to meet its constitutional

obligations.

Public Act 4 does not circumvent collective bargaining. It only allows an emergency manager to temporarily modify collectively bargained agreements to bring local units’ expenses in line with revenues. Because approximately 70 percent of a local government’s expenses are wages and benefits, they must be part of the solution.

Without PA 4, bankruptcy is the only option and it’s not a good one. Bankruptcies take years and the only winners are the lawyers and consultants who make millions during the process. Additionally, the emergency manager shows up in the community every day, unlike a bankruptcy judge who is accountable to no one and likely would never set foot in the community whose fate he or she would decide.

Public Act 4 is not about party politics or division. The original statute was signed into law by a Democrat and governors from both parties have used it sparingly. PA 4 is about working together to resolve financial emergencies and to ensure quality services for citizens and their children.